Thursday's Markets Update (Feb 2, 2023)
If you feel things are going the wrong way in Silicon Valley, there is a reason for that. The Challenger Job Cuts report, published on Thursday, February 2nd, revealed that out of 102,943 cuts announced in January by all employers, a 136% increase from December, 41,829 cuts (41%) were made by technology companies. This is a 58-fold increase from January 2022, when only 72 technology-related job cuts were made.
The total number of cuts in 2022 reached 363,824. In line with this, the Bureau of Labor Statistics recorded a 3.0% increase in nonfarm business sector labor productivity in the fourth quarter of 2022. Clearly, the individuals hired in 2021 simply didn't have enough time to make a significant contribution :)
FYI: The U.S. Bureau of Labor Statistics measures nonfarm business sector labor productivity by dividing real output (Gross Domestic Product) by the total number of hours worked by all persons in the nonfarm business sector. This results in a measure of output per hour worked, which is the standard definition of labor productivity. The Bureau uses data from the National Income and Product Accounts and the Current Employment Statistics program to calculate this measure.
At the same time, the Department of Labor showed a 3,000 decrease (to 183,000, below market expectations of 200,000) in the number of new claims for unemployment benefits in the fourth week of January. I suppose this decrease in the tech industry was compensated by an increase in transportation, as according to the Census Bureau, "orders for transportation surged 16.9%, driven by a 115.5% increase in orders for non-defense aircraft and parts".
Despite any changes in economic fundamentals, NASDAQ rose another 1.1% (opening at 12,065, closing at 12,200) during Thursday's session, while BTC remained below 24,000 (opening at 23,766, closing at 23,872). The January "whale rally" has prompted a pause to allow retail buyers to catch up. Otherwise, institutional investors, who dominated the BTC market in 2021, will have no one to offload their "immutable wealth" to in times of need, such as during the next FTX-type event.